Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the cases of sovereigns, sub-sovereigns and supranational organisations that may act as a lender of last resort.

Scope performs monitoring reviews to determine whether material changes and/or changes in macro-economic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit rating’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope announces the result of each monitoring review on its website and/or on its subscription platform ScopeOne.

Scope completed the monitoring review for the Republic of Malta (long-term local- and foreign-currency issuer and senior unsecured debt ratings: A+/Stable; short-term local- and foreign-currency issuer ratings: S-1+/Stable) on 11 November 2025.

This monitoring note does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on scoperatings.com.

Key rating factors

For the updated rating report accompanying this review, please see here.

The Republic of Malta’s long-term A+/Stable ratings are underpinned by the following credit strengths: i) a robust economic momentum and strong growth potential relative to European peers; ii) a record of fiscal prudence, declining budget deficits, and moderate government debt; iii) a strong external position enhancing resilience to external shocks, further bolstered by euro area membership; and iv) a robust banking sector.

Malta’s ratings are challenged by: i) an externally dependent and resource-constrained economy, which presents risks to the stability and sustainability of the growth model; ii) fiscal risks stemming primarily from energy subsidies, an unfavourable demographic outlook, and government guarantees issued to state-owned enterprises; and iii) lingering, albeit improving, institutional challenges, as well as lower governance metrics relative to rating peers.

Malta is expected to benefit from still robust real GDP growth projected at 3.9% in 2025, down from 6.8% in 2024 and 10.6% in 2023, significantly outpacing the EU average growth. Domestic consumption is expected to be the main driver of economic activity, benefiting from the widening of tax income bands and favourable labour market conditions. Solid performance of services exports also support Malta’s robust economic prospects and strengthen resilience to international trade tensions. EU-funded investments will support growth in 2026 but significantly decrease in 2026 as the Recovery and Resilience Facility comes to an end. Scope projects real GDP growth to average 3.8% over 2026-2030, although structural bottlenecks (shrinking workforce, limited energy supply) and slowdown in key sectors constrain long-term growth prospects.

The general government deficit is expected to steadily decline to 3.2% of GDP in 2025, down from 3.6% in 2024, supported by robust tax receipts linked to strong economic performance and enhanced tax compliance. The decline in the deficit is also supported by a reduction of energy subsidies, in line with lower global energy prices, and lower capital transfers. In the longer term, the projected reduction of the fiscal deficit is underpinned by Malta’s medium-term fiscal structural plan 2025-2028 to exit the EU’s Excessive Deficit Procedure. A track record of prudent fiscal management is also expected to support budgetary consolidation despite pressure on current spending, including on pension and social benefits, as well as capital expenditure pressures related to the climate and digital transitions.

The robust economic momentum and lower budget deficits drive Scope’s projection of general government debt remaining stable and below 50% of GDP between 2025 and 2030. Malta benefits from moderate public debt, resulting in a contained interest burden projected to average 1.4% of GDP between 2025 and 2030, as well as moderate public sector borrowing requirements that are covered through domestic capital markets.

The Stable Outlook represents the opinion that risks for the ratings are balanced over the next 12 to 18 months.

Upside scenarios for the long-term ratings and Outlooks are (individually or collectively):

1. Structural reforms are implemented to improve the resilience of the country’s growth model, resulting in greater economic diversification into higher-value added and sustainable economic activities;
    
2. Continued fiscal consolidation returns public debt-to-GDP to a firm downward trajectory.

Downside scenarios for the ratings and Outlooks are (individually or collectively):

1. Structural deterioration in the growth outlook;
    
2. Fiscal outlook weakens significantly;
    
3. Institutional fragilities re-emerge and threaten Malta’s economic attractiveness and competitiveness.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Rating Methodology, 27 January 2025) is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Thomas Gillet, Director

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